Criminal Prosecution Quashed After Exoneration in Departmental and Vigilance Inquiries: Delhi High Court
Safiya Malik
The High Court of Delhi, Single Bench of Justice Neena Bansal Krishna held that a criminal prosecution cannot be sustained when both departmental and vigilance inquiries have found no substance in the allegations. Allowing petitions filed by a senior bank officer challenging an FIR registered by the CBI’s Bank Securities and Fraud Cell and the framing of corruption charges, the Court quashed all proceedings against him. It observed that the petitioner’s involvement was limited to a post-sanction inspection unrelated to the alleged loan fraud and that his prior exoneration in internal inquiries rendered continuation of the criminal case an abuse of the court’s process.
The case originated from an FIR registered by the Central Bureau of Investigation (CBI) on 23 February 2012 following a complaint by G. Ravindra Kumar Gandhi against M/s Century Communication Limited (CCL) and several bank officials of IOB. The complaint alleged that CCL, engaged in the media business, obtained large credit facilities from a consortium of ten banks led by IOB and subsequently diverted funds using fake and fabricated invoices. The total loss assessed by the banks amounted to Rs. 16,319.81 lakh.
The petitioner, Gurbachan Singh Matta, was serving as General Manager at IOB during the relevant period. The CBI alleged that he, along with other senior officers, had confirmed installation of equipment without proper verification, contrary to Credit Administration Circular No. 14 dated 31 March 1997. This report, dated 20 January 2005, was later used as a basis for further sanctions. The prosecution charged Matta under Sections 120B, 420, 467, 468, and 471 of the Indian Penal Code, 1860, and Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 1988.
The petitioner argued that his role was limited to overseeing the functioning of the Mumbai unit upon the direction of his superiors and that he had not participated in the sanctioning, disbursal, or diversion of funds. He contended that the alleged conspiracy ended on 16 August 2004, months before his inspection on 20 January 2005. He further stated that the responsibility for asset verification lay with the Credit Officer of the Branch, not the General Manager. Supporting his argument, he referred to the internal communication dated 27 November 2012 from IOB’s General Manager (Vigilance), confirming that asset verification was the branch’s responsibility.
The petitioner further relied on precedents such as Radhey Shyam Kejriwal v. State of West Bengal (2011) 3 SCC 581 and Ashoo Surendranath Tewari v. Deputy Superintendent of Police (2020) 9 SCC 636, to argue that once a person is exonerated on merits in disciplinary proceedings, criminal prosecution based on identical facts should not continue. The CVC and departmental inquiries had cleared him of all charges, concluding that there was no misconduct in his role.
Justice Neena Bansal Krishna observed that “the only allegation against the petitioner in the charge sheet was that there was dereliction of duty in conducting the inspection along with the other team members on 20.01.2005, without confirming the installation of equipment and verifying the cost of equipment with invoices.” The Court noted that an inspection had already been conducted by Senior Manager S. Raghavan on 19 January 2005, confirming that the equipment was installed and the unit was fully operational. The petitioner’s subsequent visit, on instructions from his superiors, was to oversee the functioning of the unit, not to verify invoices.
The Court stated that “the petitioner being the General Manager was merely to oversee the working of the unit and that it was being discharged properly. He was not responsible for verification of invoices or the loan amounts to be disbursed to the accused.” The inspection report prepared by the petitioner was found to be based on the detailed report of the Senior Manager, and there was no evidence of any criminal intent or wrongdoing.
Justice Krishna recorded that “there is no criminality in the acts of the petitioner disclosed from the above facts. He has discharged his duties correctly.” The Court also referred to the CVC inquiry report, which had categorically held that verification of equipment with invoices could not be expected from a General Manager-level officer and that his inspection was in accordance with the norms of the bank.
Quoting from Videocon Industries Limited v. State of Maharashtra (2016) 12 SCC 315, the Court noted that “in case of exoneration, however, on merits where the allegation is found to be not substantiated at all and the person held innocent, criminal prosecution on the same set of facts and circumstances cannot be allowed to continue, the underlying principle being the higher standard of proof in criminal cases.”
The Court elaborated that “the CVC order is unequivocally an exoneration of the petitioner on merits. The findings were not based on benefit of doubt or technicalities but on substantive evaluation of the allegations and evidence.”
Justice Krishna further observed that “if the lower threshold of proof in departmental proceedings could not be met, no purpose would be served in prosecuting the criminal proceedings where the standard of proof is much higher.” Applying this principle, the Court concluded that continuation of the criminal proceedings against the petitioner, despite his exoneration on identical charges, would be unjustified.
The Court declared, “there is nothing more which can be brought on record by the prosecution in support of their allegations against the petitioner and he on identical charge stands exonerated by CVC. The continuation of the criminal prosecution would be an abuse of process of the Court and not in the interest of justice.” Consequently, the Court quashed the FIR and all proceedings arising therefrom.
“The present FIR/RC.No.BDI/2012/E/0003 along with all the proceedings emanating therefrom including the order on charge dated 25.02.2017, is hereby quashed against the petitioner.” The Court clarified that the observations made in the judgment were confined to the petitioner and “are not an expression on merits against the other accused persons facing trial in the charge sheet.”
Advocates Representing the Parties:
For the Petitioner: Mr. Sewa Ram and Mr. C.S. Walia, Advocates
For the Respondent: Mr. Ripudaman Bhardwaj, Special Public Prosecutor, with Mr. Kushagra Kumar, Mr. Abhinav Bhardwaj, and Mr. Amit Kumar Rana, Advocates
Case Title: Gurbachan Singh Matta v. Central Bureau of Investigation
Neutral Citation: 2025: DHC:9367
Case Number: CRL.M.C. 4964/2017 & CRL.REV.P. 366/2017
Bench: Justice Neena Bansal Krishna
